Firm A is the low-cost provider in the market but doesn't believe its current price of $20 can be raised for competitive reasons. Prices are expected to remain stable during coming periods; hence, P = MR = $20. Total cost for the company is as follows:

TC = $2625 + $5Q + $0.01Q2

a) Calculate the profit-maximizing output level. (2 marks)

Answer

b) Calculate the company's optimal profit. (2 marks)

Answer

c) Calculate the optimal profit as a percentage of sales revenue (profit margin). (1 mark)